Moody's has doubts on Budget meeting targets

February 01, 2021 16:45

Moody's Investors Service, while silent on the sovereign rating on the higher-than-expected fiscal deficit numbers, expressed doubts over attaining the higher revenue targets and divestment realisation as assumed in the Budget.

The Union Budget 2021-22 has pegged a fiscal deficit of 9.5 per cent for the current financial year as against the consensus 7 per cent, and 6.8 per cent for 2021-22 with a market borrowing of around Rs 12 lakh crore.

It also assumes Rs 1.75 lakh crore to be scooped up from divestment.

The Fiscal Responsibility and Budget Management Act will also be amended to achieve a fiscal deficit of 4.5 per cent of GDP by 2025-26 only.

"The fiscal deficit target of 6.8 per cent for 2021-22 tries to strike a balance between supporting growth and a modest deficit reduction, but improvements in tax compliance and monetisation targets may be difficult to achieve," the rating agency said in a note.

The note was authored by Moody's Associate Managing Director (Sovereign Risk) Gene Fang and its Vice-President and Senior Credit Officer (Financial Institutions) Alka Anbarasu.

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